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Partisan Political Business Cycles in the German Labour Market? Empirical Tests in the Light of the Lucas-Critique

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Abstract

This paper focuses on alternative specifications ofpartisan political business cycles (Partisan Theory,Rational Partisan Theory and hysteresis-augmentedRPT). It elaborates on analogies of the natural ratehypothesis underlying all specifications and thecointegration concept. Accordingly, problems of thespecification of hypotheses, estimation and inferencein a cointegrating framework with politicalinterventions are treated. Super-exogeneity tests areshown to be equivalent to tests of the Lucas-critiqueand the RPT. Therefore, the concept ofsuper-exogeneity is transferred to empirical tests ofpartisan cycles. By this, a new testing framework ofpartisan cycles is developed and applied to Germanlabour market data.

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  1. Ruhr-Universität Bochum, Germany

    Ansgar Belke

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Belke, A. Partisan Political Business Cycles in the German Labour Market? Empirical Tests in the Light of the Lucas-Critique. Public Choice 104, 225–283 (2000). https://doi.org/10.1023/A:1005149716541

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